Two crisis of Mexican Neoliberalism IIPPE Conference The Hague 2013 Alejandro Valle Baeza Vallebaeza.wordpress.com

Introduction In Mexican economy had its third serious crisis in the last thirty years: – –1982 External debt crisis (Also Banking and exchange rate crisis), Neoliberal tendencies reinforced since then. – –1994, Banking and exchange rate crisis. Political crisis: Ruling party with serious problems after decades on power. – –2008 productive crisis mainly in exportation manufacture sector

In this presentation I try to explain differences between and crises. The conventional explanation is: Mexican economy is more stable now thanks to Neoliberal policies

II. Neoliberalism wages

II. Neoliberalism and wages

The crisis 1986 Mexico joined the GATT 1989, controls of interest bank rates were removed began the process of developing the North American Free Trade Agreement ( NAFTA ) it was signed in Foreign investment law is changed to attract more money from abroad

During previous years to NAFTA implementation, several public companies were privatized, by example quasi-monopoly phone company: Telmex During previous years to NAFTA implementation, several public companies were privatized, by example quasi-monopoly phone company: Telmex 1994 Nafta started to operate. The candidate of the ruling party was killed (by a solitary killer! –remember JFK), Zapatista guerilla declares war against Mexican government Nafta started to operate. The candidate of the ruling party was killed (by a solitary killer! –remember JFK), Zapatista guerilla declares war against Mexican government.

crisis Crisis started in December 1994 by Peso was devaluated: Crisis started in December 1994 by sudden interruption of external capital flows. Peso was devaluated: 3.38 pesos per US dollar in 1994 to 6.42 pesos in US government and IMF guarantee loans by ¡51637 million dollars! Nevertheless million was used.

US intervention was not philanthropic but to save US pension funds who owned Mexican government bonds US intervention was not philanthropic but to save US pension funds who owned Mexican government bonds This Mexican crisis had negative effects in many other countries: so it was called the “Tequila effect.” All the Mexican banks faced technical bankruptcy problems. Government bailed out banks, i. e. socialized looses.

Domestic sales of the automobile industry fell 71.7%, however exportation aminorate the problem hence production diminish much less than that. USA between 1929 and 1932 automobile sales declined 75.2%.

crisis Exports fell 14.8% in 2009 Remittances from abroad fell 15.7% in 2009 (from 25 to 21 billion doll) GDP growth -6.5% in 2009

Mexican automotive industry is presented as a history of neoliberal success this a propaganda bias; because its counterpart is the deterioration of that US industry.

During 50´s Detroit was the richest US city

In January 2012 it was reported that a small US company would start producing again television sets. Seventeen years before, Zenith, then the last manufacturer of US ownership, already had become a subsidiary of the Korean LG.

Conclusions Neoliberalism has been a period of mediocre growth that has impoverished Mexican workers, forcing many to migrate Neoliberalism has been a period of mediocre growth that has impoverished Mexican workers, forcing many to migrate Two major crises have occurred after installing Neoliberalism: and The first was a financial crisis and the second a productive one. Two major crises have occurred after installing Neoliberalism: and The first was a financial crisis and the second a productive one.

The Mexican success in certain industries (manufacture of automobiles and televisions) is the other face of the serious problems of U.S. industry The Mexican success in certain industries (manufacture of automobiles and televisions) is the other face of the serious problems of U.S. industry The best situation of Mexican trade balance is not so much a legitimate triumph but a gain resulting from the US losses. Mexico is a side winner of competition war The best situation of Mexican trade balance is not so much a legitimate triumph but a gain resulting from the US losses. Mexico is a side winner of competition war